New Delhi: Russian President Vladimir Putin's visit to India is poised to significantly bolster economic cooperation between the two nations and address the growing trade deficit that heavily favors Russia. The two-day summit is expected to facilitate discussions on expanding Indian exports to Russia, particularly in sectors like pharmaceuticals, agricultural products, and automobiles. Agreements concerning shipping, healthcare, and enhanced connectivity are also anticipated.
The current trade imbalance is a major concern, with India's imports from Russia estimated at $63.84 billion in FY25, while exports amounted to only $4.88 billion. This deficit is largely due to India's increased imports of discounted Russian crude oil, which have surged since the beginning of the Russia-Ukraine conflict. Before 2022, Russia accounted for a negligible portion of India's crude oil supply, but now it constitutes a substantial 37.3% of India's total imports.
To counter this imbalance, both countries are exploring various strategies. One approach is the "Oil for Food" program, where India aims to boost its agricultural exports to Russia in exchange for continued oil purchases. This initiative could help reduce India's dependence on the US dollar and alleviate pressure on the Indian Rupee. There is also an emphasis on increasing Russian investments in Indian energy and government bonds.
During the visit, both nations are expected to discuss ways to overcome non-tariff barriers that impede the growth of Indian exports to Russia, particularly affecting marine goods, pharmaceuticals, and consumer products. Indian service sectors can also offer a huge boost to Russia. Maxim Oreshkin, Deputy Chief of Staff of the Presidential Executive Office of the Russian Federation, noted that India's share in Russia's imports is less than 2%, highlighting the potential for significant growth in areas such as agriculture, pharmaceuticals, telecom equipment, industrial components, and human resources.
India and Russia have set an ambitious goal to increase bilateral trade to $100 billion by 2030, a significant increase from the current $68.7 billion. To achieve this, discussions may include India's proposed free trade agreement with the Eurasian Economic Union, which aims to enhance strategic and economic cooperation. A labor mobility agreement is also expected, which will provide a framework for the legal migration of skilled Indian workers to Russia, addressing labor shortages in sectors like IT services.
Furthermore, the two countries are keen to deepen cooperation in other areas, including civil nuclear energy. Russia is already involved in India's largest nuclear power project, and there are ongoing discussions to expand this collaboration to include the development of small modular reactors. New defense deals may also be announced during the visit, reinforcing the strategic defense ties between the two nations.
President Putin's visit underscores the enduring partnership between India and Russia, rooted in historical ties and mutual strategic interests. Despite global pressures and economic challenges, both countries are committed to strengthening their economic cooperation and working towards a more balanced trade relationship. This visit is expected to yield multiple agreements, fostering greater economic integration and opening new avenues for growth and collaboration.
